Michael Smith: Yeah. You make marketing investments in a lot of different parts of what we call the marketing funnel, right? Some of them are more near-term impactful, some of them are more long-term impactful, and we’ve got a healthy mix of investments in 2024 that will influence both. So, yes, it’s factored into our guidance, but much of those investments are, by design, intended to pay out in more than a one-quarter, one-year point of view.
Ryan Meyers: Got it. Thanks for taking my question.
Operator: [Operator Instructions] Our next question comes from John Lawrence with Benchmark. Please go ahead.
John Lawrence: Yeah. Good afternoon. Congrats, Cord. I think, Cord, when you look at the business and where you’ve come from over the last couple of years, all the changes and better profitability, you’ve paid down the debt, as you look out a couple of years, we’ve always talked about this — the base business, manufactured brands and the R&R. As you look forward and this debt continues to come down, what does that capacity look like facility wise as far as folding something else in or extensions, etc., to widen the portfolio?
McCord Christensen: That’s a good question, John. And like, we’ve talked about it a lot, and we’ve been very vocal about it. We’ve been very disciplined as it relates to the acquisitions we’ve made and the value that we’ve paid, and the upside that we saw in those acquisitions to go out and execute and create significant synergy value for us and our shareholders. We continue to look at lots of different assets out there that we think fit our criteria, that fit our area of expertise, that we think we can do similar things with. And if they don’t match, they don’t fit, we move on. And I think whether it’s two years from now and how we paid on debt or along the way, when you buy a Rocco & Roxie that you pay 8.5 times for and you can add substantial new items, you can add substantial distribution, you can execute better, you can take costs out, those acquisitions become very affordable and frankly, aren’t something we need to consider what’s going to happen in the future.
We can do those type of deals and so we’re looking at those. But PetIQ is a pet health and wellness company. We’re very focused on hitting the bullseye with the brands, the products, the deals that we do because it’s where we can guarantee execution. And we’re going to continue to be disciplined at doing that. I think in our three-year to five-year plan, we’d like to do another three to five deals similar to the Rocco & Roxie type deal, but that’s going to be dependent on our values and on the valuations and what we know we can execute against. So I think we’re going to continue to demonstrate responsible use of cash and responsible execution, and the company can execute like we did this year without making acquisitions and continue to grow and do really well.
But we love when we find a Rocco & Roxie type brand that we can go out and just do really fun great things with and make them into just a better platform with a more significant foundation to grow from. So I think that’s kind of who we are and our culture.
John Lawrence: Great. Thanks. Good luck.
Operator: Our next question comes from Kaumil Gajrawala with Jefferies. Please go ahead. The line may be muted for your question.
Kaumil Gajrawala: Sorry about that. On mute. At some point, I’ll figure it out. I was following up on M&A and in terms of the environment. So you laid out your philosophy on approaching M&A, but given some of — there’s been some subsegments within pet that have weakened in recent months, has that changed what the — maybe the asking prices are for some of the things you’re looking at?
McCord Christensen: I don’t know that we’ve looked at the macro market and how we looked at M&A. We’re very focused on the assets that make sense for us. And we’ve had assets that don’t make sense because they still are looking for multiples that we think are unrealistic and definitely don’t fit our company. And we have other deals, we’ve looked at that once we get into them. Just the assets themselves are not as clean as they should be. And so I would say we’re not really out there pushing like you’re thinking. But look, the macro environment is good in our categories. We’ve obviously demonstrated that pet health is really strong and growing. There’s a lot of anticipation that it’s going to be a significant growth category for a long time.
And we’re positioned extremely well as it relates to pet health and wellness and retail with very little competition that’s going to be available to do those deals. So that’s where we are today, Kaumil. And I wouldn’t say that we’re going to change that kind of environment. And it seems like we’re looking at something all the time, but we pull the trigger and actually close very, very seldom.
Kaumil Gajrawala: Great. Thank you.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Cord Christensen for any closing remarks.
McCord Christensen: Thank you, everybody, for joining today. We really appreciate all your support. Obviously, thank you to the PetIQ team and all the hard work that went into delivering such an amazing 2023 and setting us up for an amazing 2024. We, as usual, are taking a conservative approach to the company’s performance and outlook, but are very excited about 2024 and beyond as PetIQ continues to gain momentum, further distance itself from its competition, and continues to execute at the level we execute. So we look forward to reporting and talking to you again in a couple of months and look forward to interact with any of you over the next few days that I would like to have interaction with who doesn’t have questions. So thank you, everyone. Take care.
Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
